FORT LAUDERDALE, Fla. - Approximately 2,600 Card Services for Credit Unions (CSCU) member credit unions will be receiving checks totaling $28.9 million as a result of the Visa initial public offering earlier this year.
Those checks–which will average about $1,100 per credit union–are funded by the payment Visa made to CSCU as part of the redemption of shares being issued to all of the card association’s members in the IPO, similar to the $20.5 million largesse PSCU Financial Services already began paying out to its member credit unions following the Visa IPO (CUJ, April 21).
As part of the Visa IPO, all of its issuers, mostly credit unions and banks, but also processors, received shares, then Visa promptly redeemed 39% of the shares at $42.77 each, the price at which the shares hit the market.
CSCU announced the “special mid-year Visa IPO patronage dividend distribution”–which represents 100% of what CSCU received from Visa in the IPO transaction–at its annual meeting here last week.
“CSCU remains focused on providing member credit unions with a full range of electronic payments products, and is committed to returning value to our members,” said Konnie Werner, CSCU Chairman and CEO of Team One Credit Union. “Accordingly, the CSCU board of directors unanimously voted to return the full $28.9 million to its member credit unions.”
“CSCU’s interest in Visa was based on fees paid on volume from the inception of Visa in 1975 through December 2005. Accordingly, CSCU will base its distributions on volume from the inception of CSCU in 1989 through December 2005. This will be a very time consuming process, to go back 19 years for 2,600 credit unions. We will work expeditiously to distribute the proceeds as soon as practical. This is the most fair and equitable method to determine each credit union’s distribution,” stated Hackney.
Approximately 2,600 credit unions sponsored to Visa by CSCU will be included in the distribution, which equates to an average distribution of $11,100. The special mid-year Visa IPO patronage dividend will be paid as soon as practical, in the August-September 2008 timeframe, rather than waiting to include the payment in the regular 2009 patronage dividend distribution.
“We are also exploring turnkey options to allow member credit unions to invest their Visa IPO windfall back into the product that generated the proceeds in the first place–their card portfolio. For example, some credit unions might consider converting primarily classic card portfolios to platinum, since they generate 80% more revenue per account,” said Hackney.
CUs all over the country scored big gains form their Visa shares. North Carolina State Employees CU received $4.1 million; Patelco CU $2.5 million; Inova FCU, in Elkhart, Ind., received $200,000 (CUJ, April 28).
But the biggest winners were the largest banks who conduct the brunt of the Visa transactions. JP Morgan Chase, the largest Visa shareholder, got a $1.5-billion check from the IPO. US Bancorp received a $492 million gain; Citigroup a $349-million gain; Wells Fargo $334 million and National City Corp. $230 million.
